UK Transport and Brexit News & Views No. 25

Mark’s Week
Hope our readers in Belgium enjoyed their Bank Holiday weekend!  We’ve had a lot of interest and enquiries following the announcement that UKTiE will be meeting Michel Barnier’s Task Force 50 on 11 July to discuss Brexit & transport across the board, the first meeting of its kind, and we hope the first of many.  Ahead of that meeting we will be preparing a joint submission reflecting the priorities and solutions from our members across the modes.  Last week we met with the transport advisor to the new chair of the Transport Committee of the European Parliament, Karima Delli MEP. It’s clear from that meeting and the others we have held that EU preparations for Brexit continue despite the UK general election.  There is an increasing level of impatience that the UK is reluctant to explain in sufficient detail what sort of future relationship they would like, but a growing confidence that whoever wins the UK general election and whatever the majority, in the end they will have to compromise with the EU. Compromises can still be bad if they are made for you by others who perhaps don’t share or understand your interests or priorities.  And there’s real risk of that for transport, particularly given that our sector is very fragmented and that, so far at least, the Government has been a little reluctant to move beyond the slogans ‘deep and special,’ and ‘frictionless and seamless relationship’ and to share our detailed plans with European partners of what a future transport relationship looks like, particularly one that satisfies their demands that it must be compatible with both European and international law.  But we have to do that, and do that soon.  We really can’t leave it to others, or leave it much longer.

1. Brexit by numbers
After Brexit, the UK will lose more than 750 international arrangements with 168 countries says the Financial Times. 295 of those concern trade, 202 regulatory co-operation and 65 concern transport, mostly regarding airline services. FT estimates that Whitehall will need to renegotiate 17 existing EU aviation agreements with third countries, as well as around 40 UK bilateral deals that include EU clauses. “The nearest precedent you can think of is a cessation of a country — you are almost starting from scratch” said Andrew Hood, a former UK government lawyer.

2. Which election result would be best for Brexit?
According to a poll of economists by Reuters, a Conservative victory on June 8 would give Britain the strongest hand in the Brexit negotiations. However nearly as many said a coalition would secure the best Brexit deal.  “After all, if Brexit really is the biggest challenge the UK has faced since World War Two, as some people would have it, then it maybe needs a similarly coordinated response.” said Peter Dixon of Commerzbank. Out of 30 polled, only 5 said that a Labour victory would be best for the upcoming talks.

3. The view from Berlin: How bad is the Brexit for the German economy?
According to a new study commissioned by Brigitte Zypries, Germany’s Minister for Economic Affairs and Energy, the German economy can cope well with the exit of Great Britain from the EU. The authors write that in the long-term Germany’s economic output would only decline by 0.2 percent whilst the UK economy would decline by 1.7 percent. If both sides reach a comprehensive trade agreement Germany’s GDP would only reduce by 0.1 percent. The report also notes that only three sectors would be affected a bit harder, namely pharmaceutical, automotive and engineering companies. Financial services and banks could even benefit from Brexit. In light of this report it is hard to imagine that Germany will go above and beyond to help the UK against the EU27 interests which in economic terms are far more important for Germany.

4. The end of the Le Touquet Treaty?
France’s new president Emmanuel Macron wants to scrap the current border deal between the UK and France. The current system, determined by the Le Touquet treaty, allows UK officials to conduct passport checks on the French side of the Channel. CEO of UK Chamber of Shipping, Guy Platten, has warned that cancelling the treaty would mean extra checks on both sides of the channel and would be a nightmare for travelers, as checks cause delays. Both he and the PM are keen to tell Macron that scrapping the treaty would be bad for the UK and France. Mr Platten also questioned the legality of reports that say ferry companies would be made responsible for stopping illegal migrants to the UK.

5. UKWA chief executive optimistic about post-Brexit future
Peter Ward, chief executive of the UK Warehousing Association (UKWA) told an audience of transport and logistics companies there could be huge opportunities for transport and warehouse operators post-Brexit, despite the “potentially exorbitant” costs of administering additional declaration. At a meeting co-hosted with the British International Freight Association he said “The future will be shaped not by boffins and think tanks, but by those of us working at the ‘coal face’ who truly understand the impacts of Brexit on supply chains and, crucially, on our export/import industry.”

6. All of Ireland looking to minimize Brexit damage
Industry lobby group Hospitality Ulster has warned that any type of border between North Ireland and the Republic could make thousands of tourists hesitate to visit the North and potentially cost the economy millions of pounds.  A statement from the Catholic bishops in Northern Ireland told citizens to keep Brexit in mind when voting.  Ireland’s Transport Minister Shane Ross has finally met with some of his counterparts abroad, having received a lot of criticism for not doing so earlier last week. He has promised that there will be no pulling back from an upgraded Derry to Dublin road link as a result of Brexit.

7. The importance of the transport sector to UK’s post-Brexit future
The law firm DWF spoke to 180 CEOS and other chief officers from companies within retail, logistics, utilities, manufacturing and construction in order to produce a report on the importance of transport to economic prosperity. They asked about the importance of transport, the state of infrastructure, the impact of Brexit and their confidence in emerging transport technologies. The conclusion was that there needs to be more investment into transport infrastructure in order for the UK to improve its ability to trade, which will be crucial post-Brexit.

8. What hard Brexit could mean for transport companies
Mark Hue-Williams from insurance firm Willis Towers Watson has presented some of the issues he sees for transport companies post-Brexit. “The question isn’t “if” but “by how much” their present market conditions will change.” He writes about the effect the fall in value of the pound could have. Theoretically it could boost the fortunes of Britain’s exporters and the transport companies that support them and also make the British expertise more cost-competitive. However it is also having an effect on the everyday consumer who is now tightening his belt. Retail sales fell by 1.4% in the first quarter of 2017, which has an impact on transport companies that support the import supply chains. This careful attention to personal expenditure also affects commercial airlines as leisure travel becomes considered a luxury item.

9. UK companies urged to set up EU subsidiaries on the continent….
Post- Brexit, UK companies will no longer be eligible to have direct contracts with the EU. Jan Wörner, director-general of the European Space Agency (ESA) has urged UK firms who want to continue their involvement in EU funded space programmes to set up EU subsidiaries as a short term solution. “This is against my idea of Europe, but it would help British industry to grow and take part until everything is sorted out.” This may be a solution for transport companies too.

10. ….come to Greece, says shipping minister
The Greek government is looking to persuade London-based ship-owners and shipping-insurance companies to move their EU headquarters to Greece post-Brexit. “We’re in contact with five large ship-insurance brokers who are considering various EU member countries for the transfer of their headquarters,” said Greek Shipping Minister Panagiotis Kouroumblis. The government is also asking Greek ship-owners in the UK to move back home, hoping their patriotism will win out over the lack of financial incentives to do so.  The government wants Piraeus to become “one of the world’s largest shipping centers and a modern maritime cluster”.

11. FTA deputy chief executive gives Brexit interview
The latest episode of the Motor Transport Podcast featured an exclusive interview with Freight Transport Association deputy chief executive and resident Brexit expert James Hookham. The interview was about Brexit and the interviewer asked questions about what Brexit will mean for supply chains, how it will affect border crossings and what it will mean for the wider economy. Mr Hookham says he fears Theresa May walking out on negotiations over a weekend and suddenly finding that WTO rules apply on Monday.

12. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops: